Good day and thank you for standing by. Welcome to the BrightView Fiscal Second Quarter earnings call. I would now like to hand the conference over to your speaker today, John Shave, Vice President of Investor Relations. Thank you. Please go ahead, sir.

Thank you, Tabitha, and good morning. Before we begin, I'd like to remind listeners that some of the comments made today, including responses to questions and information reflected in the presentation slides, are forward-looking and actual results may differ materially from those projected. Please refer to our company's SEC filings for more detail on the risks and uncertainties that could impact the company's future operating results and financial condition. Comments made today will also include a discussion of certain non-GAAP financial measures. Reconciliations to comparable GAAP financial measures are provided in today's press release. Disclaimers on forward-looking statements and non-GAAP financial measures apply both to today's prepared remarks as well as the Q&A. For context, BrightView is the leading and largest provider of commercial landscaping services in the United States, with annual revenues in excess of $2 billion, approximately 10 times our next largest competitor. Together with our legacy companies, BrightView has been in operation for more than 80 years, and our field leadership team has an average tenure of 14 years. We provide commercial landscaping services ranging from landscape maintenance and enhancements to tree care and landscape development. We operate through an integrated national service model, which delivers services at the local level by combining our network of more than 240 maintenance and development branches with a qualified service partner network. Our branch delivery model underpins our position as a single source end-to-end provider to a diverse customer base at the national, regional and local levels, which we believe represents a significant competitive advantage. We also believe our customers understand the financial and reputational risks associated with inadequate landscape maintenance and consider our services to be essential and nondiscretionary. BrightView creates the best landscapes on earth. I will now turn the call over to BrightView's Chief Executive Officer, Andrew Masterman.

Thank you, Andrew, and good morning to everyone. I am very pleased with the results we delivered in our second quarter of fiscal 2021. The stability of our maintenance and contract business, coupled with a very solid snow quarter, drove excellent results. Combined with efficiencies gained from our investments in technology and our ongoing focus on productivity and cost management have all been meaningful in driving improved margins and collectively underscore the strength of our business. Turning to Slide 14, second fiscal quarter 2021 revenue for the company increased 16.6% versus the prior year to $651.9 million. Maintenance revenues for the three months ended March 31 increased 29.6% versus the prior year to $535.7 million. Despite continued ancillary demand headwinds, impressive snow contract growth, combined with $16.6 million from acquired businesses, resulted in an outstanding quarter. Investments in technology to support our sales and account manager teams are enhancing customer relationships and driving both organic growth and strong cash generation. For the three months ended March 31, development revenues of $117.1 million declined 16.4%, excluding a $6.1 million revenue reduction from the BrightView Tree Company divestiture. While we expected COVID-related softness to be more pronounced in the second quarter versus last year, we are also encouraged by our development backlog, bidding pipeline and bid calendar, and we anticipate increased stability during the second half of fiscal 2021. Turning to the details on Slide 15, total adjusted EBITDA for the second quarter was $66.8 million, an increase of 71.7% or a $27.9 million increase versus the prior year. Productivity initiatives and continued SG&A cost containment efforts resulted in a strong 320 basis point expansion and EBITDA margin to 10.2%. In maintenance, adjusted EBITDA of $72.3 million represented an increase of $31.6 million or 77.6% from $40.7 million in the prior year. In addition to higher snowfall, cost containment initiatives, solid labor management and leveraging our technology initiatives led to strong margin expansion. The result was an impressive 370 basis point improvement in EBITDA margin to 13.5%. In development, adjusted EBITDA decreased $3.3 million to $10.9 million compared to $14.2 million in fiscal Q2 of 2020. The decline was driven by lower revenue, approximately 20% of which was attributable to the sale of the BrightView Tree Company. However, through strong cost containment efforts, the development business was able to mitigate against the revenue loss, which resulted in a modest 40 basis point decrease in EBITDA margin to 9.3% in fiscal Q2. Corporate expenses for the fiscal second quarter were $16.4 million, representing 2.5% of revenue, a 40-basis point improvement compared to the same quarter last year. Now let me provide you with a snapshot of our first half results on Slide 16. Total revenue for the company increased 6.8% to $1.21 billion. In maintenance, first half revenues were $953.8 million, a $121.4 million increase or 14.6% versus 2020. In development, revenues decreased 15% to $254.4 million. As expected, COVID-related backlog softness was more pronounced in Q2 versus last year. Total adjusted EBITDA for the first half of the fiscal year increased 31.8% to $119.3 million compared to $90.5 million in the prior year. Adjusted EBITDA from maintenance increased 37.9% to $121.9 million compared to $88.4 million in the prior year. Our snow contract book of business growth, favorable weather and continued cost containment initiatives drove the segment's EBITDA growth. Adjusted EBITDA for development decreased $5.4 million. This expected performance shortfall in fiscal Q2 was offset by productivity initiatives that led to minimal margin compression. Corporate expenses for the six months were 2.5% of revenue, a 30-basis point improvement compared to the prior year. In the second half of fiscal 2021, we expect modest expense headwinds as a result of reinitiating our 401(k) matching contribution, increased year-over-year incentive compensation driven by our improved results, and the addition of Juneteenth holiday. Diversity, equity and inclusion helps us build a welcoming, inclusive environment and an engaged workforce. As part of our initiatives, we added Juneteenth as a company holiday to celebrate the emancipation of those who had been enslaved in the United States. The second half impact of these items will be approximately $8 million over Q3 and Q4. Let's move now to our balance sheet and capital allocation on Slide 17. Net capital expenditures totaled $24.5 million for the first half of fiscal 2021, down from $32.4 million in the first half of fiscal 2020. Expressed as a percentage of revenue, net capital expenditures were 2% of revenue in the first half, and we expect fiscal 2021 capital expenditures to be approximately 3% of revenue, in line with our long-term guidance. In the first half of fiscal 2021, we self-funded approximately $75.7 million on acquisitions versus $87.1 million in the first half of fiscal 2020. Our net debt decreased to $1.05 billion at the end of fiscal Q2 2021 versus $1.17 billion at the end of fiscal Q2 2020. Our leverage ratio was 3.5 times at the end of the second fiscal quarter of fiscal 2021 versus 4.1 times in the prior year quarter. This is a historical best for BrightView. Based on our full year fiscal 2021 midpoint of guidance, and coupled with initiatives that we have ongoing, we are on a solid trajectory to further improve this key metric. Our free cash flow performance in Q2 continued to be solid despite higher accounts receivable during our snow season. This was driven by our solid EBITDA results, timing of capital expenditures, lower interest expense and decent net working capital performance. An update on liquidity is on Slide 18. At the end of the second fiscal quarter of 2021, we had approximately $207.2 million of availability under our revolver, approximately $70.5 million of availability under our receivables financing agreement, and $123.8 million of cash on hand. Total liquidity as of March 31, 2021, was approximately $401.5 million. This compares to $235.5 million as of March 31, 2020. This gives us ample flexibility to further implement our strategy. Overall, we are pleased with our year-to-date performance. We are confident in our full year guidance and the momentum we plan to carry into fiscal 2022. With that, let me turn the call back over to Andrew.

Thank you, John. Turning now to Slide 20, our second fiscal quarter results were exceptional. The operating and financial performance we delivered is what we know we can consistently deliver. And most exciting is that we see so much more opportunity and potential. In summary, here are the key takeaways. The market we are seeing signs in all verticals that the impact of the pandemic is beginning to recover. The fundamentals of our business and our industry remain strong growth. Our investment in our sales team is driving sustainable organic growth. Our realized snow organic growth and net new sales in fiscal Q2 were the highest ever for BrightView. We are confident this trend will continue. Technology. We continue to remain focused on deploying technology to enhance productivity, profitability and client engagement. We have fully implemented our ETC labor management tools across both segments and are expanding adoption of HOA Connect, facilitating direct customer communication with our teams. Our expanded usage of the Salesforce Customer Relationship Management tool and quality site assessment software continued our focus on retention and supporting property enhancement. Sales and marketing. In addition to technological enhancements, we continue to grow and invest in our sales organization and expand the use and effectiveness of our sales tools. Digital marketing initiatives in new markets and verticals with a more effective omnichannel approach continue to support the success of these expanded sales teams. Our sales and marketing strategies and structure are a formula for long-term success and our investments in field-based sales and operations leadership will drive stronger new sales and result in improved retention, while further streamlining our service delivery. M&A. Additionally, the results of our acquisition strategy continue to benefit our revenue growth and, with an attractive pipeline, acquisitions will continue to be a reliable and sustainable source of growth. Our business is cash-generative and low capital intensive, allowing us to consolidate the marketplace in the efficient and disciplined manner that we have shown to be repeatable. Combined with our horticultural knowledge and excellence and our ability to operate multiple service lines under one banner, we believe we are well positioned to drive solid performance in the second half and beyond. Cash. At the end of the second fiscal quarter, our leverage ratio was a historic low for BrightView. We are on a trajectory to further improve this metric in fiscal 2021. In closing and most importantly, I'd like to thank our dedicated employees, families, clients and partners for their resiliency and dedication during a challenging time. A focus on taking care of each other and our customers and taking pride in how we engage with our clients and the beauty of their properties we design, develop and maintain has sustained our organization. We will continue this focus on our people and our culture to deliver confidence in the future that lies ahead. Thank you for your attention this morning. We'll now open the call for your questions.

And your first question is from the line of George Tong with Goldman Sachs.

Hi, Thanks. Good morning. My first question is around ancillary revenue performance. Can you elaborate on how that trended over the course of the quarter, especially relative to the prior quarter and what type of ancillary growth you're embedding into your forward-looking guidance?

Yes, George, if you look at the progression during the quarter, actually, February was a tough ancillary month, because of the amount of snow that we had across the entire country. But I think when you look in total, we actually saw an improving ancillary profile vis-à-vis the last several quarters, whereas ancillary was down about the same amount that the contract was down. So an improving profile over the last several quarters, which we believe will continue to sustain that momentum as we go into Q3 and Q4 and are expecting year-over-year ancillary growth in both quarters.

Got it. That's helpful. And then you mentioned investments into your sales force as being a key growth driver of organic growth acceleration in the coming quarters. Can you perhaps talk a little bit about your plans there, what the hiring plans are, what the plans to drive sales force productivity involve? And how much of a lift to organic growth you would expect from the sales force initiatives?

Yes. In Q2, what we were able to deliver was 10% organic growth in snow in Q2. That was primarily based on the initial results we've had from that investment in our salesforce. Some of the productivity elements that have helped that performance include an integrated CRM that allowed them to tightly manage opportunity pipeline and the digital marketing initiatives of omnichannel that has expanded the overall opportunity pipeline for new deals. That cascaded from snow development into land. And so we continue to be hiring. Our plan is to continue to hire 5% plus growth over our current salesforce over the course of the next several months while utilizing those tools. And thus, we're expecting that 4% plus growth in organic growth to happen not only in Q3 and Q4, but to continue to underpin the 2% to 3% long-term guidance we've given and that our organic growth will be sustainable over the next several quarters.

And your next question is from the line of Andy Wittmann with Baird.

Great, Thank you for taking my questions. Good morning everybody. I guess, Andrew, I thought I talked about, or sorry, you talked about labor and the market for labor and service economy labor trends. There's been a lot of talk in the popular press and on earnings calls this season. I thought you guys are in a place where you have a heck of a lot of labor out there, too. And I wanted to know what you're seeing out there in terms of your ability to keep people? What you're seeing in the wage rates as a result of that, if anything, and how you're managing through it as we get into the busy season here?

Yes. Great question, Andy. And we're not immune to what the country is seeing across the board on labor. This is our big hiring period—March, April, May—we bring on thousands of employees as we get into the green season of the business. We have been able to bring thousands of employees into the business. In addition, we are utilizing the H-2B program. So a combination of that has allowed us to continue to onboard people into the business. That being said, it's a constant issue in the field of continuing to build up labor to the levels that we hope. We're able to do it every year. It always is an issue. I would have to say this year it's probably a little more difficult than others, but that doesn't mean we haven't been able to succeed. What has happened is we have had some upward wage pressure. John might be able to add more detail.

Yes, good morning, Andy, this is John. We've seen wage inflation of circa 4% to 5% over the last three to four years. We've been very clear about that. To Andrew's point, we're seeing more upward pressure on that, certainly in different parts of the country, so another percent or so on top of that. How we're mitigating that is we're aggressively pursuing pricing, surcharges, things of that nature to our customers. We're being very flexible with our workforce. And with the size and scale of our workforce, yes, we have a lot of openings right now, but if you divide that number by 250-odd branches, it's still very manageable at the branch level. Historically we may be looking for three to five people at a branch, we're now looking for five to eight people at a branch. So still manageable, but definitely tightening, and we're being as aggressive and proactive as possible.

That's really good context. Thank you for that, John. I just thought maybe my follow-up question here would just be trying to get a little bit more context on the guidance, given that you've done a little bit more M&A since the last call. I think you said, Andrew, on the script, that this year you've closed on $100 million worth of annualized revenue. Just so that we can get this on a comparable basis to the guidance that you've given, can you comment on how much of the revenue, how much revenue guidance is inorganic this year inside of that guidance so we have context how it all phases in?

For the full year, Andy, since our last call we've closed on the Birch acquisition that we announced at the beginning of January 2021. If you look at our forecast right now, the $100 million that we referenced for this year, about two-thirds is going to be maintenance and one-third or so is going to be development. We do believe we're going to be realizing about $100 million. So not only is that the annualized level, that's also given the tail of business coming over from 2020, the total amount that we expect to reflect is also about $100 million.

Your next question is from the line of Tim Mulrooney with William Blair.

Good morning Andrew, Good morning John. So one of the large equipment distributors in your space recently reported results, and they're expecting to get really strong pricing this year, up 3% to 5%, which is higher than normal. I'm wondering if you could talk about inflation expectations on the large cost inputs in your business, if that's accelerating and how you think that might affect margins?

Well, most of the material cost inputs we have in the business, Tim, are priced in a pretty short window to when we actually acquire material. So when you talk about landscaping material that we buy, it really goes into ancillary services. Those ancillary services are bid and priced usually within a two to six week window. So whatever the current cost we're seeing tends to be reflected in the pricing we give in that current period. Any inflationary aspects when it comes to material pricing, we're generally able to pass that through via price to our customer base.

Okay. What kind of pricing are you expecting to get this year, Andrew? And can you talk about how that compares to last year? And how that compares to pricing you'd get in a normal year pre-pandemic?

Last year, pricing was basically at zero or actually slightly negative when it comes to scope and the overall top line when we saw what was happening in 2020. This year, we're back to more of a normalized approach. As John mentioned, we've seen some upward pressure on labor costs and we're thus seeing some slight upward pressure on pricing.

And Tim, I'll add a little bit to Andrew's comment. He's spot on. Last year at best it was flat to slightly down. Historically, we've been able to get somewhere between 1% to 2% of net price. We're working extremely hard to get back to those historic levels, and we feel pretty confident we can get there. But I think the key for us is when you have the contract piece, price becomes more visible. On the ancillary, it's project-based. And to Andrew's point, it's a much shorter window. So you have much more discretion in getting pricing in there based on your current inputs and what's going on with labor. We have a lot of flexibility there.

Your next question is from the line of Hamzah Mazari with Jefferies.

Good morning. My question is just around maintenance adjusted EBITDA margins. They are sitting at 13.5%. Could you maybe talk about as ancillary comes back and you did also mention $8 million of incremental costs in the second half, when you look at all the puts and takes, how should we think about that margin trajectory on the maintenance side of the business going forward?

Hamzah, you're right. As we believe ancillary returns, some of the cost containments that we had during the pandemic will start coming back. John talked about roughly $8 million over two quarters. Thus, as ancillary comes back, the drop-through won't be as strong as a pure incremental approach relative to a regular non-pandemic comparator. I think you'll see continued improvement relative to our margin performance in 2020. As we look toward the higher end of our guidance, we're trending back toward pre-pandemic levels, and I'd expect them to continue to improve as we get into 2022.

Got it. Thank you for the color. And just my follow-up question, as you guys look at your maintenance end markets, which seem like corporates are 40%, HOAs are 34%, somewhere in that range. Are there other verticals or white spaces from an end market perspective that you think you're underpenetrated on that could be bigger verticals for you? I know you compete sort of on the higher end of commercial, but any thoughts there would be great. Thank you.

When you look at the marketplace, probably the least penetrated vertical and actually the biggest opportunity for the industry is education. Education has outsourced food service and other services, but landscaping has been largely self-performed for many institutions. Our internal data suggests as few as 20% of landscaping has been outsourced in that vertical. We believe there is real opportunity for us to provide a better experience and performance for properties while achieving some cost advantages. We're already seeing results in new wins—secondary as well as college and postsecondary schools are converting in-house landscaping into contracted services. It's a longer sales process, but a meaningful opportunity for growth over time.

And your next question is from the line of Bob Labick with CJS Securities.

Good morning. Congratulations on great results and outlook.

Thanks Bob.

I wanted to start, can you give us an update on the rollout of HOA Connect and then the feedback and results you've been getting to date with that exciting product?

Yes, absolutely. HOA Connect has seen continued adoption. We've added dozens of properties using HOA Connect within the last quarter, and we expect to accelerate that as we go into the summer. We've taken some of our top HOA Connect customers and created an advisory panel to inform ways we can continue to use technology to enhance engagement with those properties. We listen to what the customer wants and deploy internal IT resources to customize the experience and ensure a best-in-class product. We believe that customization and development of version 2.0 and 3.0 will be a positive momentum builder into 2022 and 2023.

Okay. That sounds great. And then I guess my follow-up would be, you spoke about the M&A pipeline, and typically there's seasonality to acquisitions and you are kind of done by now. But I think you mentioned there may be more in the back half of this year. Could you talk about your thoughts on acquisitions over the next six months? Or do they kick in again in fiscal 2022?

Acquisitions historically lighten in the middle of summer, although we've closed large deals in May before. Our pipeline is quite strong today. We're under several letters of intent and evaluating opportunities. We expect we may be able to close one or two more deals before the fiscal year ends, though deals that close in Q3 and Q4 have less impact on the current fiscal year and more effect in the next year. The pipeline supports our confidence in delivering guidance. We previously communicated $60 million of annual revenue from acquisitions in the past, and we've been delivering more than that—over $100 million at one point. We've built acquisition expectations up to around $80 million for the coming period and expect to continue lifting our targets.

And your next question is from the line of Judah Sokel with JPMorgan.

Hi, Good morning. First question is a quick one, just to clarify the $100 million of M&A expected in the year. Is that a gross number, and then you have to net off the $25 million from the divestiture of the BrightView Tree Company? Or is that a net number already and you're really expecting more like $125 million of contribution and then you take off the $25 million loss from the sale to get you to $100 million?

Yes, good question, Judah. That is a gross number. So if you take the broad numbers, there's about $100 million of acquisitions, about one-third of which is development—around $33 million—and then you need to take out $25 million to $30 million when you consider the BrightView Tree divestiture.

Okay. So on a net basis, it's more like $70 million to $75 million?

That's correct.

Got it. Thanks for that clarification. And then my other question is just around development. You guys talked about the fact that Q2 was expected to see softness in the backlog and you're expecting some more stabilization over the course of the year. Can you just remind us what exactly caused the increase in the backlog softness in Q2? And what you're seeing over there that gives you some confidence that things are improving. Just talk about a little bit of color of what's going on in that end market. Thank you.

Absolutely. When we saw development softness in Q2, we had already seen signs in our fiscal Q3 and Q4 last year as architectural activity and construction activity slowed. That led to fewer new projects and contracts. We expected the delivery of that softness in Q2. Looking out to Q3 and Q4, we're seeing a stronger book and renewed architectural activity. Construction and municipal infrastructure investments are increasing, and we are already seeing infrastructure projects that are driving development opportunities even before any larger stimulus. As a result, we expect Q3 to be roughly in line with the comparable prior period within a few percentage points, and a solid Q4. The combined second half backlog and bidding activity underpin similar levels of activity in the second half of 2021 versus 2020, and we expect steady growth into 2022.

As there are no further questions, ladies and gentlemen, this concludes today’s conference call. We thank you for participating. You may now disconnect.